10 Ways You Can Profit From The Fiscal Cliff

After the United States Presidential election, equity markets were hammered. Further, companies reporting third-quarter earnings delivered less than impressive results and many have been guiding lower for the fourth quarter and fiscal year 2013. Add to this the proverbial "fiscal cliff" on every investor's mind, which has the potential to negatively impact everyone in the United States simultaneously, and there is major cause for concern. The fear of going over this devastating fiscal cliff has exerted much pressure on markets that many believe were only propped up by central bank actions in the months leading up to the election. However, in this past two weeks of trading, the markets have rebounded a bit higher on some positive rhetoric out of Washington that both Democrats and Republicans want to avert the cliff and the hope that they will do so. I believe the markets will continue to trade on news out of Washington for the remainder of the year in addition to trading on major economic news. It is more than likely that markets will trade up on days where progress on a fiscal cliff resolution is seemingly made, and trade down when it seems negotiations are failing and move minimally or trade flat in between. Most investors, including this author, do not believe that markets will trade flat come the fiscal cliff deadline. If we go over the cliff, investors may want to consider taking some bearish action should market panic ensue. Bearish conditions could lead investors to consider selling stock, selling covered calls on their positions, shorting stocks, buying puts or investing in a bear fund. If we have a resolution, it will most likely (depending on the terms of the resolution of course) be one of the most significant risk-on events in the last few years. In this case, bullish investors will be buying stocks and ETFs, selling puts, buying call options etc. While each of these approaches in a bearish or bullish scenario has their respective benefits and risks, in this article, I want to ....READ MORE